Basis Point-Alibaba shortlists 5 banks for $8 bln jumbo loan

Analysis & Opinion

HONG KONG, March 27 (Basis Point) - Chinese e-commerce giant
Alibaba Group has shortlisted five banks to form an
initial arranger group for its $8 billion jumbo loan according
to sources, expected to be one of the largest financings in Asia
this year.

The loan will be split into three- and five-year maturities,
the sources added.

Alibaba had a meeting with representatives from the five
banks today, according to one of the sources. The arranger group
is likely to be further expanded in the coming weeks, said
another source.

Alibaba declined to comment.

Part of the proceeds will refinance $4 billion in loans put
in place last year, as well as for general corporate purposes.
The Chinese internet company is refinancing its outstanding
loans with a new facility to free itself from covenants that
capped its borrowings to $4 billion.

Some sources had said earlier the additional amount Alibaba
is raising from the latest loan could help fund its obligations
under a $7.1 billion share buyback deal it struck with Yahoo Inc
last May. The share buyback deal had closed last year
but there could be some obligations from that deal that need
financing support.

As reported earlier, the buyback, agreed by Alibaba and
Yahoo on 21 May 2012, cost $7.1 billion and was funded by $6.3
billion in cash and $800 million through a new issue of
preferred stock by Alibaba to Yahoo.

Sources had said earlier that Alibaba is expected to pay
lower pricing than on its loans signed last year, which were
well received.

The $4 billion in loans completed last year comprised a $1
billion four-year facility signed in July by eight banks and
three other loans of $1 billion each signed in June.

The three other loans included two bilaterals of three- and
four-year tenors from China Development Bank and a $1 billion
three-year facility from a group of 19 lenders. The three-year
facility from the 19 banks was part of a US$3bn dual-tranche
debut which also comprised a $2 billion bridge that was taken
out by CDB's bilaterals.